Hotel Transaction U.S. Georgia

Historic Georgian Terrace Hotel in Atlanta Sold for $61 Million

SoTHERLY Hotels Inc. (NASDAQ: SOHO) announced that the Company has acquired the Georgian Terrace Hotel, an adjacent 698-space parking structure and a 0.6 acre development parcel for $61.0 million.

Historic Georgian Terrace Hotel in Atlanta sold for $61 million

SoTHERLY Hotels Inc. (NASDAQ: SOHO) announced that the Company has acquired the Georgian Terrace Hotel, an adjacent 698-space parking structure and a 0.6 acre development parcel for $61.0 million. The 326-room independent, full-service hotel is located in Atlanta, Georgia’s revitalized Midtown business district. The Hotel will be managed by Chesapeake Hospitality.

As a part of the transaction, the Company closed on a $41.5 million loan with Bank of the Ozarks collateralized by a first mortgage on the Property. The loan carries a floating interest rate of the 3-month LIBOR rate plus 3.75% with a 4.00% interest rate floor and amortizes on a 25-year schedule following a 12-month interest only period. Also as part of the transaction, the Company closed on a $19.0 million loan with Richmond Hill Partners, LP and Essex Equity Joint Investment Vehicle, LLC. The loan carries a fixed interest rate of 10.00% and a one-year term. Proceeds from both loans were used to fund the acquisition in addition to available cash.

Drew Sims, Chief Executive Officer of the Company, commented, “The Georgian Terrace Hotel is a significant acquisition for SoTHERLY Hotels. This iconic hotel gives us a landmark property in the second largest MSA in the Southern United States. Atlanta also serves as a primary feeder market to our existing hotel portfolio and therefore it has been a high priority for us. We are pleased to not only enter this market but to acquire a property of this caliber. We believe there is tremendous upside to both the market and the Hotel.”

The historic Georgian Terrace Hotel, nicknamed the “Grand Dame of Atlanta”, was built in 1911. Located directly across from the “Fabulous” Fox Theatre along Atlanta’s Midtown Mile, the Hotel is an architectural masterpiece prominently displayed at the intersection of Peachtree and Ponce de Leon Streets. Midtown is Atlanta’s strongest performing lodging submarket and is benefiting from a surge in development and business activity with strong office leasing trends and several projects currently under construction. Most notably, Emory University’s $225.0 million Proton Cancer Therapy Center is being constructed adjacent to the Hotel and is set to open in late 2015.

The Hotel features guest rooms averaging over 800 square feet each, the largest in the market, over 16,000 square feet of flexible meeting space, and three food and beverage outlets. The Hotel was modernized in 1991 with the addition of a new tower. Since 2009, over $15.0 million has been invested in the Hotel to renovate the guest rooms and public spaces in order to position the property as “Atlanta’s Modern Classic”. The Hotel is a member of Preferred Hotels Group, Historic Hotels of America, and is listed on the National Register of Historic Places.

For year-end 2013, the Hotel operated at approximately 72.0 percent occupancy, with an average daily rate (“ADR”) of approximately $135.85, room revenue per available room (“RevPAR”) of approximately $97.44, hotel earnings before interest, taxes, depreciation, and amortization (“Hotel EBITDA”) of approximately $4.5 million, and net operating income after capital reserves (“NOI”) of $3.7 million. The acquisition price represents a cap rate of approximately 7.5% on 2015 estimates. The Hotel is being acquired at an allocated cost of approximately $140,000 per key.

THERLY Hotels Inc., formerly MHI Hospitality Corporation, is a self-managed and self-administered lodging REIT focused on the acquisition, renovation, upbranding and repositioning of upscale and upper upscale full-service hotels in the Southern United States. Currently, the Company’s portfolio consists of investments in twelve hotel properties, eleven of which are wholly-owned and comprise 2,698 rooms. The Company also has a 25.0 percent interest in the Crowne Plaza Hollywood Beach Resort. All of the Company’s properties operate under the Hilton Worldwide, InterContinental Hotels Group and Starwood Hotels and Resorts brands. SoTHERLY Hotels Inc.was organized in 2004 and is headquartered in Williamsburg, Virginia.

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